UNITED STATES PATENT AND TRADEMARK OFFICE
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`
`APPLE INC.,
`
`Petitioner,
`
`V.
`
`SMARTFLASH LLC,
`Patent Owner.
`
`Case CBM2015-00131
`
`Patent 8,061,598 B2
`
`PATENT OWNER’S NOTICE OF APPEAL
`
` 88mHdszuunz
`
`
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`
`APPLE INC.,
`
`Petitioner,
`
`V.
`
`SMARTFLASH LLC,
`Patent Owner.
`
`Case CBM2015-00131
`
`Patent 8,061,598 B2
`
`PATENT OWNER’S NOTICE OF APPEAL
`
` 88mHdszuunz
`
`
`
`- Notice is hereby given, pursuant to 37 CPR. § 90.2(a), that Patent Owner
`
`Smartflash LLC appeals to the United States Court of Appeals for the Federal
`
`Circuit from the Final Written Decision entered on November 10, 2016 (Papeflfi
`
`the Decision Denying Rehearing entered on January 27, 2017 (Paper 35 and from
`
`all underlying orders, decisions, rulings and opinions regarding US. Patent No.
`
`8,061,598 (“the ‘598 Patent”) including the Decision - Institution of Covered
`
`Business Method Patent Review entered on November 16, 2015 (Pape‘gfl
`
`For the limited purpose of providing the Director with the information
`
`requested in 37 CPR. § 90.2(a)(3)(ii), Patent Owner anticipates that the issues on
`
`appeal may include the following, as well as any underlying findings,
`
`determinations, rulings, decisions, opinions, or other related issues:
`
`0 Whether the Board erred in finding that claims 3-6, 8-14, 16-25, 27-
`
`30, and 32-41 of the ’598 Patent are unpatentable under 35 U.S.C. §
`
`101 ;
`
`0 Whether the Board erred in denying Patent Owner’s Motion to
`
`Exclude (Paper 26); and
`
`0 Whether the Board erred in finding that the subject matter of the ‘598
`
`Patent is directed to activities that are financial in nature and in
`
`instituting Covered Business Method review of the ‘598 Patent.
`
`
`
`Copies of this Notice of Appeal are being filed simultaneously with the
`
`Director, the Patent Trial and Appeal Board, and the Clerk of the United States
`
`Court of Appeals for the Federal Circuit.
`
`Any required fees may be charged to Deposit Account No. 501860.
`
`Dated March 27, 2016
`
`/ Michael R. Casey /
`
`Michael R. Casey
`Registration No. 40,294
`Davidson Berquist Jackson & Gowdey, LLP
`8300 Greensboro Drive
`
`Suite 500
`
`McLean, VA 22102
`Telephone: (571) 765-7705
`Fax: (571) 765-7200
`Email: mcasey@dbjg.com
`Attorney for Patent Owner
`
`
`
`CERTIFICATE OF SERVICE
`
`The undersigned hereby certifies that this PATENT OWNER’S NOTICE
`OF APPEAL was filed with the Patent Trial and Appeal Board using the E2E
`System and was served, by agreement of the parties, by emailing copies to counsel
`for the Petitioner as follows:
`
`Gabrielle E. Higgins (gabrielle.higgins@ropesgray.com)
`James R. Batchelder (james.batchelder@ropesgray.com)
`ApplePTABService-SmartFlash@ropesgray.com
`
`The undersigned hereby further certifies that on March 27, 2017 this
`PATENT OWNER’S NOTICE OF APPEAL (and its three attached decisions)
`were filed with the Federal Circuit via CM/ECF (along with one courtesy copy by
`hand delivery) and two (2) copies were served on the US. Patent and Trademark
`Office via in-hand delivery as follows:
`
`Director of the United States Patent and Trademark Office
`
`c/o Office of the General Counsel
`
`Madison Building East, 10B20
`600 Dulaney Street
`Alexandria, VA 22314-5793
`
`Dated: March 27, 2017
`
`/ Michael R. Casey /
`
`Michael R. Casey
`Registration No. 40,294
`Davidson Berquist Jackson & Gowdey, LLP
`8300 Greensboro Drive
`
`Suite 500
`
`McLean, VA 22102
`Telephone: (571) 765-7705
`Fax: (571) 765-7200
`Email: mcasey@dbjg.com
`Attorney for Patent Owner
`
`
`
`Trials@uspto.gov
`Tel: 571-272-7822
`
`Paper 35
`Entered: January 27, 2017
`
`UNITED STATES PATENT AND TRADEMARK OFFICE
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`
`APPLE INC.,
`
`Petitioner,
`
`V.
`
`SMARTFLASH LLC,
`Patent Owner.
`
`Case CBM2015-00131
`
`Patent 8,061,598 B2
`
`Before JENNIFER S. BISK, RAMA G. ELLURU,
`
`JEREMY M. PLENZLER, and GREGG I. ANDERSON
`Administrative Patent Judges.
`
`PLENZLER, Administrative Patent Judge.
`
`DECISION
`
`Denying Patent Owner’s Request for Rehearing
`37 CFR. § 42.71
`
`
`
`{-21
`
`CBM2015-00131
`
`Patent 8,061,598 B2
`
`INTRODUCTION
`
`Apple Inc. (“Petitioner”), filed a Petition to institute covered business
`
`method patent review of claims 3—6, 8—14, 16—30, and 32—41 of US. Patent
`
`No. 8,061,598 B2 (EX. 1001, “the ’598 patent”) pursuant to § 18 of the
`
`Leahy-Smith America Invents Act (“AIA”). Paper 1 (“Pet”).1 On
`
`November 16, 2015, we instituted a covered business method patent review
`
`(Paper 8, “Institution Decision” or “Inst. Dec.”) based upon Petitioner’s
`
`assertion that claims 3—6, 8—14, 16-25, 27—30, and 32—41 (“the challenged
`
`claims”) are directed to patent ineligible subject matter under 35 U.S.C.
`
`§ 101. Inst. Dec. 23. Subsequent to institution, Smartflash LLC (“Patent
`
`Owner”) filed a Patent Owner Response (Paper 18, “PO Resp.”) and
`
`Petitioner filed a Reply (Paper 23, “Pet. Reply”) to Patent Owner’s
`
`Response. Patent Owner, with authorization, filed a Notice of Supplemental
`
`Authority. Paper 30 (“Notice”). Petitioner filed a Response to Patent
`
`Owner’s Notice. Paper 31 (“Notice Resp”).
`
`In our Final Decision, we determined Petitioner had established, by a
`
`preponderance of the evidence, that claims 3—6, 8—14, 16—25, 27—30, and
`
`32—41 of the ’598 patent are directed to patent ineligible subject matter
`
`under 35 U.S.C. § 101. Paper 33 (“Final Dec.”), 3, 33. Patent Owner
`
`requests rehearing of the Final Decision with respect to patent ineligibility of
`
`the challenged claims under § 101. Paper 34 (“Request” or “Req. Reh’ g”).
`
`Having considered Patent Owner’s Request, we decline to modify our Final
`
`Decision.
`
`1 Pub. L. No. 112—29, 125 Stat. 284, 296—07 (2011).
`
`
`
`CBM2015-00131
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`Patent 8,061,598 B2
`
`STANDARD OF REVIEW
`
`In covered business method review, the petitioner has the burden of
`
`showing unpatentability by a preponderance of the evidence. 35 U.S.C.
`
`§ 326(e). The standard of review for rehearing requests is set forth in 37
`
`C.F.R. § 42.71(d), which states:
`
`The burden of showing a decision should be modified lies with
`the party challenging the decision. The request must specifically
`identify all matters the party believes the Board misapprehended
`or overlooked, and the place where each matter was previously
`addressed in a motion, an opposition, or a reply.
`
`ANALYSIS
`
`Patent Owner’s Request is based on a disagreement with our
`
`determination that the challenged claims are directed to patent-ineligible
`
`subject matter. Req. Reh’g 3.
`
`In its Request, Patent Owner initially presents arguments directed to
`
`alleged similarities between the challenged claims and those at issue in DDR
`
`Holdingsz, Enfish3, and Bascom“. Id. at 4—10. Those cases were each
`
`addressed in the Patent Owner Response or Patent Owner’s Notice, as well
`
`as in our Final Decision. As noted above, our rules require that the
`
`requesting party “specifically identify all matters the party believes the
`
`Board misapprehended or overlooked, and the place where each matter was
`
`previously addressed in a motion, an opposition, or a reply.” 37 C.F.R.
`
`42.71(d) (emphasis added). In its Request, however, Patent Owner does not
`
`2 DDR Holdings, LLC v. Hotelscom, LP, 773 F.3d 1245 (Fed. Cir. 2014).
`3 Enfish, LLC v. [Microsoft Corp, 822 F.3d 1327 (Fed. Cir. 2016).
`4 BASCOM Global Internet Services, Inc. v. AT&T Mobility, LLC, 827 F.3d
`1341 (Fed. Cir. 2016).
`
`
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`CBM2015-00131
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`Patent 8,061,598 B2
`
`identify any specific matter that we misapprehended or overlooked.
`
`Although Patent Owner repeatedly states that “the Board misapprehends
`
`Smartflash’s argument” (see, e. g., Req. Reh’ g 5, 10), it offers no explanation
`
`' as to how we misapprehended or overlooked any particular “matter [that]
`
`was previously addressed in a motion, an opposition, or a reply.” In fact,
`
`Patent Owner does not cite to its papers even once when alleging an
`argument was misapprehended with respect to these cases. See id. at 4—10.
`
`Rather than providing a proper request for rehearing, addressing particular
`
`matters that we previously allegedly misapprehended or overlooked, Patent
`
`Owner’s Request provides new briefing by expounding on argument already
`
`made.
`
`To the extent portions of the Request are supported by Patent Owner’s
`
`argument in the Patent Owner Response or in Patent Owner’s Notice, we
`
`considered those arguments in our Final Decision, as Patent Owner
`
`acknowledges. See, e. g., Req. Reh’ g 5, 7, 9 (noting that “[t]he Board
`
`rejected Smartflash’s argument” with respect to each of DDR Holdings,
`
`Enfish, and Bascom). The only paper cited by Patent Owner is our Final
`
`Decision, which, as noted above, addresses Patent Owner’s arguments
`
`related to DDR Holdings (Final Dec. 16—20), Enfish (id. at 11—12), and
`
`Bascom (id. at 20—22). Patent Owner’s Request is simply based on
`
`disagreement with our Final Decision, which is not a proper basis for
`
`rehearing.
`
`Patent Owner also presents new arguments directed to alleged
`
`similarities between the challenged claims and those addressed in McRO5
`
`5 McRO, Inc. v. Bandai Namco Games Am. Inc., 837 F.3d 1299 (Fed. Cir.
`
`2016).
`
`
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`CBM2015-00131
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`Patent 8,061,598 B2
`
`and Amdocse, which were issued after Patent Owner’s Notice was filed.
`
`Req. Reh’g 11—15. Patent Owner alleges that we overlooked the Federal
`
`Circuit’s decisions in McRO and Amdocs. Id. at 2. The decisions in those
`
`cases issued before our Final Decision and, although not specifically
`
`referenced, were considered when we determined that the challenged claims
`
`are patent-ineligible.
`
`When addressing McRO, Patent Owner does little, if anything, to
`
`analogize those claims to the challenged claims, other than summarizing the
`
`discussion in McRO (id. at 11—12), and concluding that
`
`[b]ecause the challenged claims are a technological improvement
`over the then-existing systems, and limit transfer and retrieval of
`content data based on payment validation and/or rules in a
`process
`specifically
`designed to
`achieve
`an
`improved
`technological
`result
`in conventional
`industry practice,
`the
`, challenged claims are not directed to an abstract idea.
`
`Id. at 13 (citing Ex. 1001, 2625—11 (claim 3)). But McRO does not stand for
`
`the general proposition that use of rules or conditions to achieve an
`
`improved technological result, alone, removes claims from the realm of
`
`abstract ideas. In McRO, the Court explained that “the claimed
`
`improvement [was] allowing computers to produce ‘accurate and realistic lip
`
`synchronization and facial expressions in animated characters’ that
`
`previously could only be produced by human animators.” Id. at 1313
`
`(citation omitted). The Court explained that the claimed rules in McRO
`
`transformed a traditionally subjective process performed by human artists
`
`into a mathematically automated process executed on computers (i.e., the
`
`processes were fundamentally different). Id. at 1314. The Court explained
`
`6 Amdocs (Israel) Ltd. v. Openet Telecom, Inc., 841 F.3d 1288 (Fed. Cir.
`2016)
`
`
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`CBM2015-00131
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`Patent 8,061,598 B2
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`that “it [was] the incorporation of the claimed rules, not the use of the
`
`computer, that ‘improved [the] existing technological process’ by allowing
`
`the automation of further tasks.” Id. at 1314 (alteration in original) (quoting
`
`Alice Corp. Pty. Ltd. v. CLS Bank Int’l., 134 S. Ct. 2347, 2358 (2014)). The
`
`Court distinguished this from situations “where the claimed computer-
`
`automated process and the prior method were carried out in the same way.”
`
`Id. (citing Parker v. Flook, 437 US. 584, 585—86 (1978); Bilski v. Kappos,
`
`561 US. 593, 611 (2010); Alice, 134 S. Ct. at 2356)).
`
`As explained in our Final Decision, the challenged claims “merely
`
`implement an old practice in a new environmen .” Final Dec. 12 (quoting
`
`FairWarning IP, LLC v. Iatric Systems, Inc, 839 F.3d 1089, 1094 (Fed. Cir.
`
`2016)). The challenged claims are similar to the claims found ineligible in
`
`FairWarning, which the Court distinguished from those at issue McRO.
`
`FairWarning, 839 F.3d at 1094—95. In FairWarning, the Court explained
`
`that “[t]he claimed rules ask .
`
`.
`
`. the same questions .
`
`.
`
`. that humans in
`
`analogous situations .
`
`.
`
`. have asked for decades, if not centuries” and that it
`
`is the “incorporation of a computer, not the claimed rule, that purportedly
`
`‘improve[s] [the] existing technological process.”’ Id. at 1095 (citing Alice,
`
`134 S. Ct. at 2358). This is similar to the challenged claims, where the “use
`
`rule” in claim 3, for example, is merely a condition for “provid[ing] access
`
`to the content data item” that the ’598 patent explains “will normally be
`
`dependent upon payments made for data stored on the data carrier” (i.e.,
`
`allowing access when the data has been purchased). Ex. 1001, 9:22—24.
`
`With respect to Amdocs, after generally summarizing that case, Patent
`
`Owner concludes that “the challenged claims of the ’598 Patent are like the
`
`eligible claim in Amdocs because they solve a problem unique to computer
`
`
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`CBM2015-00131
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`Patent 8,061,598 B2
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`networks .
`
`.
`
`. and use[] unconventional technological approaches.” Req.
`
`Reh’g 14—15 (citing PO Resp. 30)7. We disagree.
`
`In Amdocs, the Court held that “[claim 1] is eligible under step two
`
`because it contains a sufficient ‘inventive concept.”’ Amdocs, 841 F.3d at
`
`1300. The claim at issue recited “computer code for using the accounting
`
`information with which the first network accounting record is correlated to
`
`enhance the first network accounting record.” Id. The Court explained that
`
`the “claim entails an unconventional technological solution (enhancing data
`
`in a distributed fashion) to a technological problem (massive record flows
`
`which previously required massive databases).” Id. The Court noted that,
`
`although the solution requires generic computer components, “the claim’s
`
`enhancing limitation necessarily requires that these generic components
`
`operate in an unconventional manner to achieve an improvement in
`
`computer functionality.” Id. at 1300—1301. When determining that the
`
`claim was patent-eligible, the Court explained that the “enhancing limitation
`
`necessarily involves the arguably generic gatherers, network devices, and
`
`other components working in an unconventional distributed fashion to solve
`
`a particular technological problem.” Id. at 1301. The Court distinguished
`
`the claim from the claim held unpatentable in Content Extraction &
`
`Transmission LLC v. Wells Fargo Bank, Nat ’1 Ass ’n, 776 F.3d 1343 (Fed.
`
`Cir. 2014) on the grounds that the “enhancing limitation .
`
`.
`
`. necessarily
`
`incorporates the invention’s distributed architecture—an architecture
`
`providing a technological solution to a technological problem,” which
`
`“provides the requisite ‘something more’-than the performance of ‘well-
`
`7 This is the only instance where one of Patent Owner’s papers is cited in
`the Request.
`
`
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`CBM2015-00131
`
`Patent 8,061,598 B2
`
`understood, routine, [and] conventional activities previously known to the
`
`industry.”’ Id. (citations omitted).
`
`We are not persuaded that we misapprehended Amdocs. As noted in
`
`our Final Decision, “[t]he ’598 patent treats as well-known all potentially
`
`technical aspects of the challenged claims, which simply require generic
`
`computer components.” Final Dec. 14. Unlike the generic components at
`
`issue in Amdocs, the generic components recited in claims 3—6, 8—14, 16—25,
`
`27—30, and 32—41 of the ’598 patent do not operate in an unconventional
`
`manner to achieve an improvement in computer functionality. See Final
`
`Dec. 19—23. Claims 3—6, 8—14, 16—25, 27—30, and 32—41 ofthe ’598 patent
`
`simply recite generic memories, data types, processors, and “code to”
`
`perform well-known functions with no description of the underlying
`
`implementation or programming.
`
`Accordingly, Patent Owner’s Request does not apprise us of sufficient
`
`reason to modify our Final Decision.
`
`Accordingly, it is:
`
`ORDER
`
`ORDERED that Patent Owner’s Request is denied.
`
`
`
`CBM2015-00131
`
`Patent 8,061,598 B2
`
`PETITIONER:
`
`J. Steven Baughman
`Megan F. Raymond
`James R. Batchelder
`
`ROPES & GRAY LLP
`
`steven.baughman@ropesgray.com
`megan.raymond@ropesgray.com
`james.batchelder@ropesgray.com
`
`PATENT OWNER:
`
`Michael R. Casey
`Wayne Helge
`DAVIDSON BERQUIST JACKSON & GOWDEY LLP
`smartflash-cbm@dbjg.com
`whelge@davidsonberquist.com
`
`
`
`Trials@uspto. gov
`Tel: 571 -272-7822
`
`Paper 3 3
`Entered: November 10, 2016
`
`UNITED STATES PATENT AND TRADEMARK OFFICE
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`
`APPLE INC.,
`
`Petitioner,
`
`V.
`
`SMARTFLASH LLC,
`Patent Owner.
`
`Case CBM2015-00131
`
`Patent 8,061,598 B2
`
`Before JENNIFER S. BISK, RAMA G. ELLURU,
`JEREMY M. PLENZLER, and MATTHEW R. CLEMENTS,
`
`Administrative Patent Judges.
`
`CLEMENTS, Administrative Patent Judge.
`
`FINAL WRITTEN DECISION
`
`35 US. C. § 328(a) and 37 CFR. § 42. 73
`
`
`
`CBM2015-00131
`
`Patent 8,061,598 B2
`
`A. Background
`
`INTRODUCTION
`
`Apple Inc. (“Petitioner”), filed a Petition to institute covered business
`
`method patent review of claims 3—6, 8—14, 16—30, and 32—41 of US. Patent
`
`No. 8,061,598 B2 (Ex. 1001, “the ’598 patent”) pursuant to § 18 ofthe
`
`Leahy—Smith America Invents Act (“AIA”). Paper 1 (“Pet”).1 Smartflash
`
`LLC (“Patent Owner”) filed a Preliminary Response. Paper 6 (“Prelim
`
`Resp.”). On November 16, 2015, we instituted a covered business method
`
`patent review (Paper 8, “Institution Decision” or “Inst. Dec”) based upon
`
`Petitioner’s assertion that claims 3—6, 8—14, 16—25, 27—30, and 32—41 (“the
`
`challenged claims”) are directed to patent ineligible subject matter under 35
`
`U.S.C. § 101. Inst. Dec. 23. Because a final written decision determining
`
`claim 26 of the ’598 patent to be unpatentable under § 103 had already
`
`issued in CBM2014-00108, we declined to institute a review of claim 26
`
`under § 101 in this case. Id. at 5—7.
`
`Subsequent to institution, Patent Owner filed a Patent Owner
`
`Response (Paper 18, “PO Resp”) and Petitioner filed a Reply (Paper 23,
`
`“Pet. Reply”) to Patent Owner’s Response.
`
`Patent Owner, with authorization, filed a Notice of Supplemental
`
`Authority. Paper 30 (“Notice”). Petitioner filed a Response to Patent
`
`Owner’s Notice. Paper 31 (“Notice Resp.”).
`
`We held a joint hearing of this this case and several other related cases
`
`on July 18, 2016. Paper 32 (“TL”).
`
`We have jurisdiction under 35 U.S.C. § 6(c). This Final Written
`
`Decision is issued pursuant to 35 U.S.C. § 328(a) and 37 CPR. § 42.73.
`
`1 Pub. L. No. 112—29, 125 Stat. 284, 296—07 (2011).
`
`
`
`CBM2015-00131
`
`Patent 8,061,598 B2
`
`For the reasons that follow, we determine that Petitioner has shown by a
`
`preponderance of the evidence that claims 3—6, 8—14, 16—25, 27—30, and 32—
`
`41 of the ’598 patent are directed to patent ineligible subject matter under 35
`
`U.S.C. § 101.
`
`B. Related Matters
`
`The ’598 patent is the subject of the following district court cases:
`
`Smartflash LLC v. Apple Inc, Case No. 6:13-cv-447 (E.D. Tex. 2014);
`
`Smartflash LLC v. Samsung Electronics Co., Case No. 6:13-cv-448 (E.D.
`
`Tex. 2014); Smartflash LLC v. Google, Inc., Case No. 6:14-cv-435 (E.D.
`
`Tex. 2014); Smart/lash LLC v. Apple Inc., Case No. 6:15-cv-145 (E.D. Tex.
`
`2015). Paper 43, 4—5.
`
`We have issued three previous Final Written Decisions in reviews
`
`challenging the ’598 patent.
`
`In CBM2014-00108, we found claim 26
`
`unpatentable under 35 U.S.C. § 103. Apple Inc. v. Smartflash LLC, Case
`
`CBM2014-00108, (PTAB Sept. 25, 2015) (Paper 50). In CBM2014-00193,
`
`we found claim 7 unpatentable under 35 U.S.C. § 101. Samsung Electronics
`America, Inc. v. Smarfllash LLC, Case CBM2014-00193, (March 30, 2016)
`
`(Paper 45). In CBM2015-00017, we found claims 1, 2, 15, and 31
`
`unpatentable under 35 U.S.C. § 101. Apple Inc. v. Smarfllash LLC,
`
`CBM2015-00017, (March 30, 2016) (Paper 46).
`
`C. The ’598 Patent
`
`The ’598 patent relates to “a portable data carrier for storing and
`
`paying for data and to computer systems for providing access to data to be
`
`stored,” and the “corresponding methods and computer programs.”
`
`Ex. 1001, 1:21—25. Owners of proprietary data, especially audio recordings,
`
`have an urgent need to address the prevalence of “data pirates” who make
`
`
`
`‘ CBM2015-00131
`
`Patent 8,061,598 B2
`
`proprietary data available over the internet without authorization. Id. at
`
`1:29—55. The ’598 patent describes providing portable data storage together
`
`with a means for conditioning access to that data upon validated payment.
`
`Id. at 1:59—2:11. This combination allows data owners to make their data
`
`available over the internet without fear of data pirates. Id. at 2:11—15.
`
`As described, the portable data storage device is connected to a
`
`terminal for internet access. Id. at 1:59—67. The terminal reads payment
`
`information, validates that information, and downloads data into the portable
`
`storage device from a data supplier. Id. The data on the portable storage
`
`device can be retrieved and output from a mobile device. Id. at 2:1—5. The
`
`’598 patent makes clear that the actual implementation of these components
`
`is not critical and the alleged invention may be implemented in many ways.
`
`See, e. g., id. at 25:49—52 (“The skilled person will understand that many
`
`variants to the system are possible and the invention is not limited to the
`
`described embodiments”).
`
`D. Challenged Claims
`
`The claims under review are claims 3—6, 8—14, 16—25, 27—30, and 32——
`
`41 of the ’598 patent. Inst. Dec. 23. Of the challenged claims, claims 21,
`
`27, 29, 35, 39, 40, and 41 are independent. Claims 3—6, 8—14 and 16—20
`
`depend from independent claim 1 (held unpatentable under § 101 in
`
`CBM2015-00017). Claims 22—25 depend from independent claim 21.
`
`Claim 28 depends from independent claim 27. Claim 30 depends from
`
`independent claim 29. Claims 32—34 depend, directly or indirectly, from
`
`independent claim 31 (held unpatentable under § 101 in CBM2015-00017).
`
`Claims 36—38 depend from independent claim 35. Independent claims 21
`
`and 35 are illustrative and recite the following:
`
`
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`CBM2015-00131
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`Patent 8,061,598 B2
`
`21. A portable data carrier comprising:
`
`use rule memory to store one or more use rules for a
`content data item;
`
`an interface for reading and writing the one or more use
`rules from and to the portable data carrier;
`
`a program store storing code implementable by a
`processor; and
`
`a processor coupled to [the] use rule memory, the
`interface and to the program store for implementing code in the
`
`program store,
`
`wherein the code comprises code for storing and
`accessing the one or more use rules in the use rule memory.
`
`EX. 1001, 27:17—29.
`
`35. A method of controlling access to content data using a
`data carrier, the data carrier comprising:
`
`use rule memory to store one or more use rules for a
`content data item and use status data;
`
`the method comprising:
`
`receiving a data access request from a user for the
`content data item,
`
`reading the use status data and one or more use
`rules from the data carrier that pertain to use of the
`requested content data item;
`
`evaluating the use status data using the one or
`more use rules to determine whether access to the content
`
`data item is permitted; and
`
`enabling access to the content data item responsive
`to a determination that access to the content data item is
`
`permitted.
`
`Ex. 1001, 28:43—59.
`
`
`
`CBM2015-0013l
`
`Patent 8,061,598 B2
`
`A. Claim Construction
`
`ANALYSIS
`
`In a covered business method patent review, claim terms are given
`
`their broadest reasonable interpretation in light of the specification in which
`
`they appear and the understanding of others skilled in the relevant art. See
`
`37 C.F.R. § 42.300(b). Applying that standard, we interpret the claim terms
`
`of the ’598 patent according to their ordinary and customary meaning in the
`
`context of the patent’s written description. See In re Translogz'c Tech., Inc,
`
`504 F.3d 1249, 1257 (Fed. Cir. 2007). For purposes of this Decision, we
`
`need not construe expressly any claim term.
`
`'
`
`B. Statutory Subject Matter
`
`The Petition challenges claims 3—6, 8—14, 16—25, 27—30, and 32—41 as
`
`directed to patent-ineligible subject matter under 35 U.S.C. § 101. Pet. 43——
`
`79. According to the Petition, the challenged claims are directed to an
`
`abstract idea without additional elements that transform the claims into a
`
`patent-eligible application of that idea. Id. Petitioner submits a declaration
`
`from Dr. John P. J. Kelly in support of its Petition.2 Ex. 1019. Patent
`
`Owner argues that the challenged claims are statutory because they are
`
`“rooted in computer technology in order to overcome a problem specifically
`
`arising in the realm of computer networks,” that of “data content piracy.”
`
`PO Resp. 1—2.
`
`2 In its Response, Patent Owner argues that this declaration should be given
`little or no weight. PO Resp. 5—15. Because Patent Owner has filed a
`Motion to Exclude (Paper 26) that includes a request to exclude Dr. Kelly’s
`Declaration in its entirety, or in the alternative, portions of the declaration
`based on essentially the same argument, we address Patent Owner’s
`argument as part of our analysis of the motion to exclude, below.
`
`
`
`CBM2015-00131
`
`Patent 8,061,598 B2
`
`1. Abstract Idea
`
`Under 35 U.S.C. § 101, we must first identify whether an invention
`
`fits within one of the four statutorily provided categories of patent-
`
`eligibility: “processes, machines, manufactures, and compositions of
`
`matter.” Ultramercial, Inc. v. Hulu, LLC, 772 F.3d 709, 713—714 (Fed. Cir.
`
`2014). Here, the challenged claims recite a “machine”—i.e., a “portable
`
`data carrier” (claims 3—6, 8—14, 16—25, 27—30) or a “data access terminal”
`
`(claims 39, 40, and 41)—and a “process”—i.e., a “method” (claims 32—
`
`38)—under§ 101. Section 101, however, “contains an important implicit
`
`exception to subject matter eligibility: Laws of nature, natural phenomena,
`
`and abstract ideas are not patentable.” Alice Corp. Pty. Ltd. v. CLS Bank
`
`Int ’l., 134 S. Ct. 2347, 2354 (2014) (citing Assoc. for Molecular Pathology
`
`v. Myriad Genetics, Inc., 133 S. Ct. 2107, 2116 (2013) (internal quotation
`
`marks and brackets omitted)). In Alice, the Supreme Court reiterated the
`
`framework set forth previously in Mayo Collaborative Services v.
`
`Prometheus Laboratories, 132 S. Ct. 1289, 1293 (2012) “for distinguishing
`
`patents that claim laws of nature, natural phenomena, and abstract ideas
`
`from those that claim patent-eligible applications of these concepts.” Alice,
`
`134 S. Ct. at 2355. The first step in the analysis is to “determine whether the
`
`claims at issue are directed to one of those patent-ineligible concepts.” Id.
`
`According to the Federal Circuit, “determining whether the section
`
`101 exception for abstract ideas applies involves distinguishing between
`
`patents that claim the building blocks ofhuman ingenuity—and therefore
`
`risk broad pre-emption of basic ideas—and patents that integrate those
`
`building blocks into something more, enough to transform them into specific
`
`patent-eligible inventions.” Versata Dev. Grp., Inc. v. SAP Am., Inc., 793
`
`
`
`CBM2015-00131
`
`Patent 8,061,598 B2
`
`F.3d 1306, 1332 (Fed. Cir. 2015) (emphasis added); accord id. at 1333—34
`
`(“It is a building block, a basic conceptualframework for organizing
`
`information .
`
`.
`
`. .” (emphasis added)). This is similar to the Supreme Court’s
`
`formulation in Bilski v. Kappos, 561 US. 593, 611 (2010) (emphasis added),
`
`noting that the concept of risk hedging is “a fundamental economic practice
`
`long prevalent in our system of commerce.” See also buySAFE, Inc. v.
`
`Google, Inc, 765 F.3d 1350, 1353—54 (Fed. Cir. 2014) (stating that patent
`
`claims related to “long-familiar commercial transactions” and relationships
`
`(i.e., business methods), no matter how “narrow” or “particular,” are
`
`directed to abstract ideas as a matter of law). As a further example, the
`
`“concept of ‘offer based pricing’ is similar to other ‘fundamental economic
`
`concepts’ found to be abstract ideas by the Supreme Court and [the Federal
`
`Circuit].” OIP Techs., Inc. v. Amazon. com, Inc., 788 F.3d 1359, 1362 (Fed.
`
`Cir. 2015) (citations omitted).
`
`Petitioner argues that the challenged claims are directed to the abstract
`
`idea of “payment for and/or controlling access to content.” Pet. 45.
`
`Specifically, Petitioner contends that “the challenged claims are drawn to the
`
`concept of controlling access in that they recite steps to and ‘code to’
`
`evaluate rules to determine whether access is permitted.” Id. at 48.
`
`We are persuaded that the challenged claims are drawn to a patent-
`
`ineligible abstract idea. Specifically, the challenged claims are directed to
`
`performing the fundamental economic practice of conditioning and
`
`controlling access to content. For example, claim 21 recites “code for
`
`storing and accessing the one or more use rules in the use rule memory.”
`
`Claim 35 recites “evaluating the use status data using the one or more use
`
`rules to determine whether access to the content data item is permitted” and
`
`
`
`CBM2015-00131
`
`Patent 8,061,598 B2
`
`“enabling access to the content data item responsive to a determination that
`
`access to the content data item is permitted.”
`
`As discussed above, the ’598 patent discusses addressing recording
`
`industry concerns of data pirates offering unauthorized access to widely
`
`available compressed audio recordings. Ex. 1001, 1:20—55. The
`
`Specification explains that these pirates obtain data either by unauthorized or
`
`legitimate means and then make the data available over the Internet without
`
`authorization. Id. The Specification further explains that once data has been
`
`published on the Internet, it is difficult to police access to and use of that
`
`data by intemet users who may not even realize that it is pirated. Id. The
`
`’598 patent proposes to solve this problem by restricting access to data on a
`
`portable data carrier based upon payment validation. Id. at 1259—224. The
`
`’598 patent makes clear that the crux of the claimed subject matter is
`
`restricting access to stored data based on supplier-defined access rules and
`
`validation of payment. Id. at 1:59—2:15.
`
`Although the Specification refers to data piracy on the Internet, the
`
`challenged claims are not limited to the Internet. The underlying concept of
`
`the challenged claims, particularly when viewed in light of the Specification,
`
`is paying for and/or controlling access to content, as Petitioner contends. As
`
`discussed further below, this is a fundamental economic practice long in
`
`existence in commerce. See Bilski, 561 US at 61].
`
`Patent Owner argues that claims 3—6, 8—14, 16, 17, 21—25, and 39—41
`
`are directed to “machines, not abstract ideas” (PO Resp. 18, 19), that claims
`
`18-20, 29, and 30 are “also a physical device” (id. at 19) and that method
`
`claims 32—38 “recite utilization of specific hardware .
`
`.
`
`. such that those
`
`claims are not abstract ideas” (id). Patent Owner, however, cites no
`
`
`
`CBM2015-00131
`
`Patent 8,061,598 B2
`
`controlling authority to support the proposition that subject matter is patent-
`
`eligible as long as it is directed to “machines with Specialized physical
`
`elements” or “real-world useful processes.” PO Resp. 22. As Petitioner
`
`correctly points out (Pet. Reply 2—3), that argument is contradicted by well-
`
`established precedent:
`
`There is no dispute that a computer is a tangible system (in § 101
`terms, a “machine”), or that many computer—implemented claims
`are formally addressed to patent-eligible subject matter. But if
`that were the end of the § 101 inquiry, an applicant could claim
`any principle of the physical or social sciences by reciting a
`computer system configured to implement the relevant concept.
`Such a result would make the determination of patent eligibility
`“depend simply on the drafiman’s art,”
`thereby eviscerating
`the rule that “‘ . .. abstract ideas are not patentable.”’
`
`Alice Corp. Pty. Ltd. v. CLS Bank Int’l, 134 S. Ct. 2347, 2358-59 (2014)
`
`(internal citations omitted).
`
`Patent Owner also argues that the challenged claims are like those
`
`found not to be directed to an abstract idea in Google Inc. v. Network-1
`
`Technologies, Inc, CBM2015-00113, and in Hulu, LLC v. iMTX Strategic,
`
`LLC, CBM2015-00147. PO Resp. 20—21. These decisions are non-
`
`precedential and distinguishable. In CBM2015-00113, the panel’s
`
`determination turned on a step requiring “correlating, by the computer
`
`system using a non-exhaustive, near neighbor search, the first electronic
`
`media work with [an or the first] electronic media work identifier” and on
`
`the Petitioner’s formulation of the alleged abstract idea. Google Inc. v.
`
`Network-1 Technologies, Inc, CBM2015-00113, Paper 7 (Oct. 19, 2015),
`
`13. Patent Owner argues that the challenged claims are like those at issue in
`
`CBM2015-00113 because they “correlate use status data and/or use rules
`
`with content” (PO Resp. 21). As the panel in CBM2015-00113 explained,
`
`10
`
`
`
`CBM2015-00131
`
`Patent 8,061,598 B2
`
`however, the claims at issue there required “particular types of searching
`
`processes”—i.e., “a non—exhaustive, near neighbor search”—that are
`
`different than the abstract idea alleged by Petitioner in that proceeding. Id.
`
`at 12—13. In this case, none of the challenged claims recite a specific search
`
`process by which use
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